HAMPTON, N.H. – Infosys, which is expanding its presence in the Triangle with a 2,000 hub to be created in Raleigh’s Brier Creek, has selected a mediator not a product innovator leader in its efforts to improve its dysfunctional family-like corporate dynamics.
Less than four months after Vishal Sikka resigned, Infosys (NYSE: INFY) last week appointed former Capgemini executive Salil S. Parekh as CEO and managing director effective Jan. 2, 2018. While Parekh’s selection confirms Infosys has not given up on embracing external ideas, his background suggests Infosys is rather cautious with experimenting with its future.
As Capgemini’s former head of Cloud Infrastructure Services and head of Asia-Pacific, North America and the United Kingdom, from the acquisition of EY in 2000, Parekh’s resume is quite impressive. Most importantly, he comes from a services organization, rather than a products one, similar to Sikka’s tenure at SAP as a CTO.
According to TBR’s special report Service delivery model evolution, metrics and survival tips, processes and technology are great but company culture trumps them both as the one prerequisite leadership must ensure is aligned with market demand and the broader stakeholder community. To succeed, though, first and foremost Parekh must be really good at playing company politics, as we recently saw NRN Murthy is still the “real” CEO behind the scenes. If Parekh gets under Murthy’s skin, he has a chance to become the golden child of a 30-plus-years-old organization, which can be viewed as one big (~200,000 people) dysfunctional family. If Parekh does well with his first task, he will be allowed to experiment with Infosys’ future a bit different than his predecessor.
Learning from Sikka’s missteps, Parekh can transform not just Infosys but also the India Inc. status quo
Many stakeholders (especially some of the company founders) could see Sikka’s tenure at Infosys as an unsuccessful R&D project or at least a confirmation that for large-scale services organizations are very difficult (almost impossible) to transform into a product-company like culture, P&L, strategy, etc. Learning from Sikka’s missteps, Parekh could adopt a three-mode strategy: divest struggling units such as Infosys BPO; double-down on Edge portfolio/sales strategy; and invest in technology-inclined strategy consultancy of the caliber of Roland Berger. The third step will likely be the most disruptive to the IT services industry, especially India Inc. members. Buying and integrating a large-scale purchase would not be anything new to Parekh, who helped Capgemini with the integration of iGate and managed Capgemini’s India-based headcount from a few hundred in the early 2000s to close to over 60,000 in 2015. According to TBR’s 2Q17 Global Delivery Benchmark, Capgemini’s India headcount was 98,500.
The timer for Infosys’ long-term sustainability is on, with market forces accelerating the countdown. TBR sees Parekh initially playing the role of a mediator between old and new Infosys, and then becoming an innovator and disruptor. Time will tell, but just like Sikka, if Parekh does not make significant moves on any of the aforementioned steps in the next 12 to 18 months, he, too, will likely be a 3-year CEO. TBR captures and analyzes Infosys’ financial, go-to-market, resource management and sales strategies in its quarterly Infosys reports, in which we will continue to monitor the development around Parekh’s appointment.